Investors backing musical heavy hitters such as Adele, Bon Jovi and Journey are profiting this year as homebound listeners tune in to music-streaming services, boosting the value of song catalogs and the royalty payments they generate, according to The Wall Street Journal.
Streaming figures have bounced back after a pandemic-induced blip earlier in the year. Third-quarter results from music-streaming market bellwether Spotify Technology showed the company added more users than expected and users spent more time listening. Shares of Spotify are up 60% this year, and have more than doubled since the start of 2019. New York-listed shares of Chinese streaming company Tencent Music Entertainment Group have risen more than 26% this year.
The resilience of recorded-music revenue has benefited rights holders who earn money when songs are streamed, bought or performed. Now one New-York based publisher is pursuing an initial public offering in a bid to cash in on the market’s strength.
Music royalties have grown more popular with investors as the growth of streaming services has helped reinvigorate the market for recorded music.
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| WSJ Graphic |
Streaming revenue rose to $11.4 billion last year from $9.2 billion in 2018, according to the International Federation of the Phonographic Industry, accounting for more than half of global recorded-music revenue for the first time. Recorded-music revenue topped $20 billion in 2019 for the first time since 2004. Goldman Sachs estimates the market could hit $45 billion by 2030.
“There’s a clear structural growth trend underway,” said Solomon Nevins, portfolio manager for alternatives at CCLA Investment Management, which holds a position in the Hipgnosis Songs Fund worth about £51 million, equivalent to roughly $66 million.
Spotify said it added about six million premium subscribers in the three months to September, bringing its total to 144 million, and expects to end the year with as many as 154 million.
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